Pre-Market for 5/14/2018

Bulls Get Weekly Win/ Trade Alerts (CVS, WU)

8:00am (EST)

The market was choppy throughout Friday’s session as Wall Street awaited President Trump’s speech regarding drug pricing. The plan called for the use of more generics, more competition, and for Medicare to negotiate better pricing with drug companies. 

The volatility ahead of the news led to intraday losses before a rebound afterwards that helped push the major indexes towards their morning highs. The overall market closed mixed for the session but the weekly gains were the first in three weeks.

The Dow closed higher for the 7th-straight session after climbing 0.4% while reaching a peak of 24,868. The S&P 500 extended its win streak to 3-straight sessions after adding 0.2% while testing a high of 2,732. For the week, the S&P 500 soared 2.4% while the Dow rallied 2.3%.

The Russell 2000 was higher by 0.2% after testing a high of 1,609 for the second-straight session while extending its winning streak to six-straight. The Nasdaq slipped 2 points, or 0.03%, after making a backtest to 7,372 before holding the 7,400 level into the closing bell. The small-caps were up 2.8% for the week while Tech jumped 2.7%.

Health Care showed the most sector strength after rallying 1.5% while Consumer Discretionary, Industrials, and Utilities rose 0.2%. Real Estate was the leading laggard after falling 0.5%.

Energy and Financials zoomed 3.9% and 3.6% to pace sector strength for the week. Industrials and Technology surged 3.4% and 3.3%. Utilities and Consumer Staples were the only sectors with weekly losses after giving back 2.2% and 0.3%, respectively.

The S&P 500 Volatility Index ($VIX) fell for a 7th-straight session while closing on its session low. Upper support at 12.50-12 held with a close below the latter signaling continued market momentum. Resistance remains at 13.50-13.75 and the 200-day moving average. A close back above 14.50-15 could signal a short-term market top.

RSI continues to push year-ago support levels near 30. Resistance is at 35-40 with a close above the latter being a slightly bearish signal.

Trading graph

The Spider S&P 500 ETF (SPY) traded higher for the 5th time in 6 sessions after reaching an intraday top of $273.15. Fresh resistance at $273-$273.50 held with continued closes above the latter leading to $274-$275. Near-term support is at $272.50-$272.

RSI is in a nice uptrend and appears on track to test longer-term resistance at 70. Support is at the 60-55 area.

Trading graph

The Utilities Select Spider (XLU) closed in the green for a 2nd-straight session after trading up to $50.52. Near-term resistance is at $50.75-$51 with additional hurdles at $52 and the 200-day moving average. Shaky support is at $50.25-$50 and the 50-day moving average. A close back below $49.50 would be a bearish development for lower lows.

RSI is trying to clear resistance at 50 and mid-April support with continued closes above this level signaling additional momentum. Current support is at 45-40.

Trading graph

The percentage of S&P 500 stocks trading above the 50-day moving average closed Friday at 60.79%. Continued closes above 63%-63.5% would be a bullish development for a possible push towards 70% and early December support levels. A close back below 60%-55% would signal upcoming weakness.

The percentage of Nasdaq 100 stocks trading above the 200-day moving average is currently at 61.16%. Resistance is at 65% and the mid-April peak with a move above this level being a bullish signal. Support is at 57.5% with a close below 55% being a slightly bearish development.

I have updated the parameters for our CVS and WU trades.

Momentum Options Play List

Closed Momentum Options Trades for 2018: 17-11 (61%). All trades are dated and time stamped for verification. New subscribers can look at the past history to see how the trades have played out or to research our Track Records. Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 8am and 12pm–2pm (EST) updates. Also, I will usually give you a heads-up if I think I’m going to send a Trade Alert outside of these time frames.

Progenics Pharmaceuticals (PGNX, $7.50, up $0.08)

PGNX August 8 calls (PGNX180817C00008000, $1.15, flat)

Entry Price: $1.00 (5/9/2018)

Exit Target: $2.00

Return: 15%

Stop Target: None

Action: Friday’s high reached $7.66. Resistance is at $7.75-$8. Support remains at $7.35-$7.25 and the 50-day moving average.

Trading graph

Viavi Systems (VIAV, $9.81, down $0.08)

VIAV June 10 calls (VIAV180615C00010000, $0.30, down $0.05)

Entry Price: $0.50 (5/9/2018)

Exit Target: $1.00

Return: -40%

Stop Target: None

Action: Fresh support is at $9.75 following Friday’s backtest to $9.76. Lowered resistance is at $10-$10.25.

Trading graph

CVS Health (CVS, $64.41, up $1.97)

CVS June 65 calls (CVS180615C00065000, $1.80, up $0.70)

Entry Price: $0.70 (5/9/2018)

Exit Target: $3 (Limit Order, closed half at $2.10 on 5/11/2018)

Return: 179% ($1.95 avg.)

Stop Target: $1.75, lower to $1.50 (Stop Limit)

Action: Lower the Stop Limit from $1.75 to $1.50 to give the trade a little wiggle room on this morning’s open.

Shares traded to a high of $65.61 with the options peaking at $2.52. Fresh resistance is at $65-$65.50. Rising support is at $64-$63.50.

Trading graph

Boston Scientific (BSX, $29.91, down $0.31)

BSX June 30 calls (BSX180615C00030000, $0.70, down $0.10)

Entry Price: $0.75 (5/7/2018)

Exit Target: $1.50

Return: -7%

Stop Target: None

Action: Friday’s 52-week peak reached $30.41 before the close back below $30. Support is at $29.75-$29.50. Resistance is at $30.50-$30.75.

Trading graph

Western Union (WU, $19.88, down $0.18)

WU June 20 calls (WU180615C00020000, $0.45, down $0.05)

Entry Price: $0.35 (5/7/2018)

Exit Target: $0.70

Return: 29%

Stop Target: 37 cents (Stop Limit)

Action: Set an initial Stop Limit to protect profits on a continued pullback in the stock. 

Friday’s low reached $19.83 with upper support at $19.75-$19.50 holding. Resistance remains at $20.25-$20.50.

Trading graph

Rambus (RMBS, $13.14, down $0.14)

RMBS June 14 calls (RMBS180615C00014000, $0.10, down $0.05)

Entry Price: $0.50 (5/3/2018)

Exit Target: $1.00

Return: -80%

Stop Target: None

Action: Upper support at $13-$12.75 held on Friday’s pullback to $13.06. Resistance is at $13.25-$13.50.

Trading graph

Limelight Networks (LLNW, $5.36, down $0.04)

LLNW June 5 calls (LLNW180615C00005000, $0.65, flat)

Entry Price: $0.50 (4/26/2018)

Exit Target: $1.00

Return: 30%

Stop Target: 55 cents (Stop Limit)

Action: Support at $5.25-$5.20 held on Friday’s dip to $5.30. Resistance remains at $5.40-$5.50.

Trading graph